Is it Return on Investment Or Risk of Inaction ?
COST OF INVESTMENT (GAIN FROM INVESTMENT - COST OF INVESTMENT ) ROI =
A. Revenue B. Costs Avoided Anything that leads to A or B, But only if you can directly equate its value to an action Types of Financial Impact
These are NOT ROI Website Visitors Click-throughs Store visits Press coverage “ Buzz” Employment applications Retweets FaceBook friends Blog comments Video views Twitter followers Impressions Friends But if you can quantify their financial impact, you have ROI!
Historical Metrics Excellent CRM Tools and Practices Clearly Understood and Applied Web Analytics What You Need
Lifetime Value of a Customer = (Longevity * Revenue) * Margin Basic Business Metrics New Customers Visits/Leads Value of a Lead/Visitor = Visitor * Conversion Rate * Lifetime Value Conversion Rate =
If a typical customer spends $10,000/year with you And the customer is with you for five years Your profit margin is 10% Lifetime value of a customer is ($10,000 * 5) * .1 = $5,000 Let’s Make It Real
Must be used by everyone who touches the customer Must document online, offline and landline communications Must span the engagement lifecycle Must enable segmentation and grouping CRM Essentials
Must track individual visitors You must use them Must document paths to desired destinations Must identify referring sources Web Analytics
Monthly Visitors Conversation Rate Lifetime Value Calculation Value of a Visitor 10,000 .5% $5,000 $25 10,000 x .005 x 5,000 10,000 Applying ROI: Value of a Visitor
Value of a Blog Monthly Search Traffic Estimated Traffic w/Blog Value of a Visitor Monthly Value of a Blog Monthly Blog Expense 3,000 4,000 $25 $25,000 $6,000 316% ROI ( ) $25,000-$6,000 $6,000
Value of a Tweet <ul><li>You send 50 tweets a month… </li></ul><ul><li>Generating 1,000 visitors to your website… </li></ul><ul><li>2% of whom become leads… </li></ul><ul><li>5% of whom become customers. </li></ul><ul><li>Therefore, the value of a tweet is: </li></ul>(1,000 * .02 * .05 * 5000)/50 = $100
You want to launch a customer support forum to reduce your costs of telephone support Estimated admin costs: ½ FTE yr 1, ¼ FTE yr 2 1/10 FTE yr 3 Estimated savings: 1 FTE yr 1, 1.5 FTE yr 2, 2 FTE yr 3 Cumulative ROI: the eye chart Year Item Annual Cumulative 1 Forum Administrative costs $ 35,000 $ 35,000 Savings $ 70,000 $ 70,000 ROI 100% 100% 2 Forum Administrative costs $ 17,500 $ 52,500 Savings $ 105,000 $ 175,000 ROI 500% 233% 3 Forum Administrative costs $ 7,000 $ 59,500 Savings $ 140,000 $ 315,000 ROI 1900% 429%
If You Can Measure It, You Can Calculate Its ROI Lift Studies Store visits Headline Counts Employment applications Speaking Invitations Net Promoter Score Coupons redeemed Measuring the Immeasurable